Anti-competitive rental leases have been the talk of the town in
recent weeks with the Australian Consumer and Competition
Commission (ACCC) making such leases a matter of high priority.
While the focus of publicity has been on the grocery sector, the
ACCC is likely to examine more closely the use of anti-competitive
rental leases and contractual arrangements across all sectors and
Contracts or arrangements that contain terms that restrict
dealings, restrain competition between traders with similar goods
or services or promote anti-competitive behaviour breach the
restrictive trade practices provisions in the Trade Practices
Act and can lead to serious penalties.
The ACCC's grocery inquiry challenges the restrictive terms
of leasing agreements between the major retailers and shopping
centre owners. Under many of these leases, it is believed that the
supermarket giants Coles and Woolworths have included terms that
prevent centres leasing space to competing supermarkets such as
Aldi, IGA and Costco.
The managing director of the European discount grocery chain,
Aldi believes the Federal Government needs to act quickly to change
restrictive local planning laws and restrictive lease deals that
prohibit rivals from expanding. The ACCC has acknowledged that
there are many examples where major retail operators, shopping
centre owners and major supermarkets have used the planning laws to
try to frustrate direct competition.
The Rudd government, while it does not have any direct control
over state and local zoning laws, is pushing for changes to zoning
laws and to shopping centre leasing arrangements in an effort to
increase competition in the grocery sector.
Minister for Competition Policy, Consumer Affairs and Small
Business, Craig Emerson stated that "There is an insidious
combination of local planning laws and restrictive agreements
between major supermarkets and shopping centre owners that has
created an artificial scarcity of grocery store sites".
The ACCC has reported that it has about 750 examples of leases
entered into by the supermarket giants that contain restrictive
terms and anti-competitive behaviour that could contravene the
Trade Practices Act and could lead to court action.
What are the consequences of breach?
The consequences of breaching the Trade Practices Act
are serious and may result in penalties of up to $10 million for a
corporate entity and up to $500,000 for individuals. As well as
monetary penalties, a Court may order injunctions to restrain the
anti competitive conduct and award damages for loss or damage
suffered by a competitor.
How do I minimise my risk?
One way is to review the terms of your leases and contractual
arrangements to ensure that they do not include exclusionary terms
or terms that have the purpose or likely effect of substantially
lessening competition. Contracts that restrict dealings, restrain
competition between traders with similar goods or services or
promote anti-competitive behaviour breach the Trade Practices
Act and should be amended to ensure breach does not occur.
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